ASB to sell San Francisco office building for a reported $12M

Trade for half-empty Midtown property could result in 80% discount off 2014 price

ASB to Sell San Francisco Office Building for Reported $12M

A photo illustration of ASB Real Estate Investments CEO Robert Bellinger along with 989 Market Street (Getty, ASB Real Estate)

ASB Real Estate Investments has listed a 117,200-square-foot office building in San Francisco’s Mid-Market for a reported $12 million — or 80 percent less than it traded for a decade ago.

The Washington, D.C.-based investor has put the six-story headquarters for Zendesk up for sale at 989 Market Street, the San Francisco Business Times reported, citing a brochure from JLL. 

ASB bought the building in 2014 for $61.3 million, or $523 per square foot.

While the JLL brochure doesn’t include an asking price, the firm seeks around $12 million, or $102 per square foot, an unidentified source familiar with San Francisco’s office market told the Business Times.

The property, built in 1907 and renovated in 1991, is 52 percent leased. 

Tenants include Blick Art Materials, which occupies a storefront on the ground floor; and Zendesk, which has had its headquarters there since 2011, but is about to sublease 40,000 square feet at Meta’s former offices at 181 Fremont Street, according to the Business Times.

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The building’s sale for a reported discount means ASB may be poised to take a double bath on pending real estate deals.

In February, the investor was poised to sell a 187,000-square-foot office building at 795 Folsom Street in  South of Market for a reported $52.4 million, or $275 per square foot — less than half its 2013 price.

Mid-Market is “a location of choice” for tech companies such as Zendesk, ASB CEO Robert Bellinger said of the submarket in 2014. 

But after the pandemic, Mid-Market has experienced soaring office vacancies, declining foot traffic and open-air drug use. With no recent trades in the neighborhood, a sale of 989 Market could set a baseline for pricing in the area.

Early this year, locally based TMG Partners was in talks to buy a 93,000-square-foot office building at 731 Market Street for between $160 and $180 per square foot, according to the Business Times. But the deal is held up by complications from owner Jamestown’s delinquent loan on the property.

Last month, Hudson Pacific Properties agreed to give the City of San Francisco a cut-rate deal for up to 1 million square feet of offices at a 22-story office building at 1455 Market Street in Mid-Market.

— Dana Bartholomew